China wins race for Iraqi oil contracts

Simon Webb, Reuters

DUBAI - China crossed the line first in the race for big oil contracts in post-Saddam Iraq and has gained a head start over Western oil majors in the competition for future energy deals.

China's biggest oil company, state-run CNPC, agreed to a US$3-billion service contract with Iraq on Wednesday. The deal could set a precedent for terms that fall far short of the lucrative contracts the oil majors had hoped for as they jostled for access to the world's third-largest oil reserves.

Starved of investment since the Gulf War of 1990-91 and the subsquent U. S.-led invasion of 2003 that removed former President Saddam Hussein, Iraq holds some of the world's last large, cheap, untapped oil reservoirs.

"The biggest significance of this deal is that CNPC will benefit as the first international oil company to be developing one of the giant discovered oil fields in Iraq in the new era," said Alex Munton, an analyst at global consultancy Wood Mackenzie.

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Iraq and China Sign $3 Billion Oil Contract

By Amit R. Paley
Washington Post Foreign Service
Friday, August 29, 2008; Page A08

BAGHDAD, Aug. 28 -- Iraq and China signed a $3 billion deal this week to develop a large Iraqi oil field, the first major commercial oil contract here with a foreign company since the 2003 U.S.-led invasion.

The 20-year agreement calls for the state-owned China National Petroleum Corp. to begin producing 25,000 barrels of oil a day and gradually increase the output to 125,000 a day, said Asim Jihad, a spokesman for the Iraqi Oil Ministry.

The contract revamps a deal the Chinese company had reached with Saddam Hussein in 1997 to develop the Ahdab oil field in Wasit province, south of Baghdad near the border with Iran. Unlike that deal, which called for China to share in the revenue, the current contract is based on a fixed-fee structure.

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Interesting Times Revisited

On this date in 1990, Saddam Hussein appears on Iraqi state television with a number of Western "guests" (actually hostages) to try to prevent the Gulf War.

Georgia, Russia, and Iraq?

Georgia’s borders on the Black Sea, surrounded from the north, east and south, by four countries Russia, Azerbaijan and Armenia and Turkey.

From Azerbaijan, through Russia to Europe are the “corridors of power”, where the energy line passes via the Russian territory, across Georgian territory to Turkey (then to Europe) or to the Black Sea.

It is in the EU interest that “corridors of power” via the Georgian territory to stay safe and secure, and the need for the Russia’s oil and gas, is the strength of the “Russian defense” that the EU will not take the Georgian side.

The U.S. knows this, to “liberate” the EU from the Russian oil and gas, and will dominates the oil and gas export to the EU with Nabucco line (3300 kilometers), which will start in 2010 and become operational year 2013.

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